I am extracting macOS sierra update package - macOSUpd10.12.1.pkg using following command to /tmp/macosupd directory.
pkgutil --expand /Volumes/
Since OSX 10.10, the Payload in the .pkg files is encoded as pbzx (which is in turn lzma compressed). It can no longer be extracted using gunzip. Check out the pbzx tool (a fork of the original which would not allow you to extract the Payload directly but only by passing the .pkg file directly).
Instead of
tar -xvf macOSUpd10.12.1.pkg/Payload
you can write
pbzx -n macOSUpd10.12.1.pkg/Payload | cpio -i